Hello shibes!
What a week. And we still have more to go.
Many people have had the $1 milestone in mind and are thinking of selling once DOGE hits it. Which could be after tonight’s SNL episode or it could be a few months from now.
Of course, the community benefits when everyone holds, but that’s not a practical enough reason for some people to hold. And that’s understandable. If you’re one of those people who’s thinking of selling at $1, or cashing in after tonight’s spike, here are some practical reasons to consider holding a little while longer.
- You’ll pay more on taxes if you sell now.
Most everyone reading this bought their DOGE in January 2021 or later. If you sell now, you will pay short term capital gains tax (same rate as your income tax) on your DOGE profits. BUT if you hold your crypto for 12 months or more, you will pay long term capital gains tax on your profits, which is considerably less than the income tax rate (if you make less than 40k/year, your LTCG tax rate is 0%). Paying long term capital gains tax on your earnings is better than paying income tax. So, if you hold for 12 months at least, you will pay less in taxes.
- If you wait until January 2022 to sell, then your taxes won’t be due until 2023.
Whereas if you sell in 2021, then you will have to pay taxes on that in April 2022.
- Based on historical trends, your DOGE will be worth more in January 2022 than it is today. So why not HODL.
The only cryptos with a higher market cap than Dogecoin are: Bitcoin, Ethereum, and Binance Coin (Binance is number 3 but that gap is closing quick). DOGE’s market cap is currently higher than Litecoin, XRP, and Cardano. Another driver of price is the marketing behind DOGE, which is phenomenal. That’s because of you guys. The community behind dogecoin is one of its biggest differentiators. The awareness of the coin is a huge value add compared to other currencies. Assuming that the price does continue to increase at a reasonable rate after it hits $1, then not only will you pay more in taxes, sooner, you may also lose out on potential gains in your position if you sell this year. This has been true for every crypto following a similar trajectory.
The price will may spike and drop as it usually does after a major marketing event. Nervousness in the aftermath of a drop is a regrettable reason to sell. If you must sell, then having a tax plan will benefit you greatly. Best wishes to all!
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